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MediaNama turns 8: thoughts on funding for media businesses

medianama-turns-8

Today marks the end of what has probably been MediaNama’s most important year of existence, and a year since my last post writing about MediaNama instead of the industry we cover.

The question I ask myself sometimes about MediaNama is – Why are we here? Why should we even exist? What would it be like if we didn’t exist? The answer, which I reiterate every year, remains the same.

We’re here to make a difference. Our mandate is to help create a digital ecosystem in India that is open, fair and competitive; it is to cover the digital space in India in a manner that has breadth, depth and impact, and without fear or favor.

Our work over the past year, where we have advocated for particular policies, and scrapping of others, has remained true to this mission. It is an idea that is imbibed by everyone who works with us, and hopefully remains with them even after they leave. We’d like to take this opportunity to bid adieu to two people who’ve brought you much of what you’ve read on MediaNama over the past couple of years: Sneha Johari and Vivek Pai. They’re leaving for further studies, and we wish them well. What many people aren’t aware of is that I was on a sabbatical for six-seven months in the last financial year, volunteering with the Net Neutrality campaign. During that period, MediaNama editorial was run by them, along with Shashidhar, and we then had long term advertising deals which ensured sustainability. Our advertisers allow us to keep producing the work that you read here, and our sincere thanks to them for support. Our long term advertisers, in particular, help address uncertainty in our business. Over the last year, our long term advertisers have included Getit Infomedia, Vserv and Times Internet.

We’re now in the process of rebuilding MediaNama’s editorial team, and this has made me think, well, existential thoughts, also given the fact that the advertising environment has been remarkably tough over the past few months. We have reserves, but both sales and payment cycles have been stretched, and we’ll take another look at how we want to approach things once we’re done with some of the rebuilding.

Some thoughts on Online Media and Fund Raising

Over the past couple of years, we’ve seen many entities which report on the digital space raise funding. While this hasn’t necessarily led to consistently better work yet, I’ve been thinking about what all we could do with more funding. Given what we’ve done with a bootstrapped operation, which are relatively small but profitable (and have been profitable for most of our existence), and how much there is left undone, imagine what we could do with double the team, or merely a larger team made possible with a more aggressive sales operation.

1. On funding impacting editorial, and sustainability: As I’d mentioned last year, the online news business is a news business first, and an online business second. Some (not all) of the funded sites in our domain are now chasing pageviews, either because they’re running out of money, or because they need an increase in scale to raise another round. This has led to a major dilution in quality, apparent lack of editorial focus, and more than one site has moved away from the core focus area it began with: to my eye, there isn’t been a diversification as much as their has been an attempt to do anything that will get traffic, because it’s likely that an investment will shift the focus of the business from bottomline to either a topline or traffic-growth.

Quality in editorial is difficult to scale, and scale is difficult to come by, especially if you’re a vertical in India. One strategy we’re seeing more of is the Buzzfeed approach: some content just for pageviews and scale, and some reporting for maintaining the appearance of quality.

The reason for this challenge, as I’d explained last year, is that it’s expensive to build a direct advertiser base, and advertising agencies largely seek scale in reach, and work on unsustainably low rates and poor payment cycles. The solution for this problem is a roll-up of verticals: each with their own focus, and bringing together scale as a collective, while also benefiting from direct advertising. We’d thought of this idea for MediaNama when we began, but bootstrapping doesn’t allow that kind of an approach.

General news media sites have their own challenges of focus: I’m reminded of a conversation I had with a new media startup founder last year, who said that this isn’t a business worth getting into unless they got 500 million pageviews a month. That’s an audacious target, and I doubt that they’ll get there.

For a general news site, I would say that Scroll.in in has done rather well: it has a very strong positioning, and appears to have scaled while staying true to what appears to be its mandate. For this, their founder, editor and editorial team deserve a lot of credit. The Wire and The News Minute look like they will go down a similar path. However, in all these cases, I’m keen to see how they become sustainable.

2. On why someone would invest: Some of the investments in our vertical have made me question the rationale behind the investment. Exits will be inordinately difficult to come by, so why would someone risk investing in an online media business? Lets look at this from two perspectives: For a financial investor, and one told me this, the amount of investment an online media venture requires is so small, that it makes little or no difference to their overall deployment. It’s a risk that they don’t mind taking. The same applies to some founders + angel investors. In some instances, it appears to me (no proof) that the funding is meant to buy influence.

For a strategic investor, the idea behind investment would be to learn from a smaller, focused and nimble operation, and use those ideas to sharpen their own operations. It would perhaps mean that they get additional inventory for their sales team to sell, and use their existing teams to support the growth of the business they’ve invested in, or to ensure that the money invested can be used to build teams (such as events) that eventually add value to their core business.

3. Exits: Unless the idea behind the investment is philanthropy or to learn from the investment, the investors are likely to lose patience. A financial investor might write off the investment or push for an exit, while a strategic investor might either write off the investment or acquire the company. At least one funded site in our vertical looks like its investors have written off the investment.

Invariably, online media businesses are a function of their founder, and globally, such businesses have floundered after the founder has left. This is where Sahad PV of VCCircle deserves a lot of credit: from what I know, he stepped away from editorial very early, and focused on building the business as its CEO, and building strong editorial processes under an able editorial team.

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So the question for us, when it comes to investment, has always been about whether we can continue doing the things we do (this, this, this, this, this, this), and continue to work on impact, without any external influence, whether advertisers or investors. And whether there are investors who would allow me to step away for a bit, because an issue needs work that MediaNama cannot do. We’re also not keen on a paywall because it means that there will be readers who might be prevented from reading our content, and this might hurt our ability to impact what happens in our domain.

For now, one solution that we’re thinking about is the idea of patronage. So, if you think what we do matters, and matters to you, consider contributing to us: click here.

As always, thanks for reading. If you’ve ever advertised with us, thank you: you’ve contributed to us reaching this far. Happy to get feedback, brickbats, criticism and ideas, either in the comments here, at nikhil@medianama.com or on messaging: I’m at +91-98103-10053.

Thanks.

 

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